Stock Track | Niu Technologies Plunges 5% as Q3 Earnings Show Margin Pressure Despite Sales Growth

Stock Track11-18

Shares of Chinese electric scooter maker Niu Technologies (NASDAQ: NIU) dropped over 5% in pre-market trading on Monday, following the company's fiscal third-quarter 2024 earnings release. While reporting a 10.5% year-over-year increase in revenue to $145.9 million driven by a 17.5% rise in e-scooter sales volume, Niu's quarterly results were weighed down by compressed margins and continued losses.

Niu's gross margin declined by 760 basis points from a year ago to just 13.8%, impacted by a higher proportion of lower-margin kick-scooter sales internationally, product mix changes, and increased sales incentives for its franchisees in China. This gross margin compression led to an operating loss of $8.3 million for the quarter.

The company reported a net loss of $5.8 million for Q3, slightly wider than the $5 million net loss in the prior-year period. Despite the losses, CEO Yan Li remained optimistic about retail demand and the company's new product lineup aligning with new regulations in China. Niu forecasted Q4 revenue growth of 30-50% year-over-year, but investors appeared concerned about ongoing profitability challenges weighing on the stock.

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